Contents 2006 ANNUAL REPORT & ACCOUNTS 1 ZENITH BANK PLC

Transcription

1 ZENITH

2 Contents Score Card Corporate Information Financial Highlights Result at a Glance Corporate Profile Corporate Strategy Notice of Annual General Meeting The Power of Information Technology Chief Executive s Review Chairman s Statement Corporate Social Responsibility Board of Directors Executive Management Management Team Corporate Governance Risk Management & Control Directors Report Auditors Report Report of the Audit Committee Statement of Significant Accounting Policies Profit & Loss Accounts for the Year Ended June 2006 Balance Sheet Cash flow statement Notes to the Financial Statements for the Year Ended 30th June 2006 Statement for value Added for the Year Ended 30th June 2006 Five Year Financial Summary Dividend Multiplier Scheme Shareholder Information ANNUAL REPORT & ACCOUNTS 1 ZENITH BANK PLC

3 Score Card Awards Bank of the Year 2005 The Banker Magazine Financial Times of London Best Bank Website in Nigeria (2003, 2005) Phillips Consulting Bank of the Year 2005 This Day Award for Excellence Best Custom Duty Collection Bank Maritime Quality Service Award Most Respected Bank in Nigeria PricewaterhouseCoopers and BusinessDay Ratings Solid Asset Quality Zenith Bank has a strong and consistent earning record, as well as solid capital and liquidity position the bank asset quality is solid, with the lowest nonperforming loan ratio of 1.76% as against industry average of more than 10% in Thomson Financial BankWatch, Long Term: AA We confirm that these ratings are the highest we have accorded to a Nigerian Bank. Duff & Phelps Credit Rating Co. Africa (Pty) Ltd, 2000 Impeccable Financial Condition We believe Zenith Bank is a financial institution of impeccable financial condition and overwhelming capacity to meet obligations as and when they fall due Augusto & Co. Aaa Rating ( ) Fitch Ratings AA Zenith is a bank with strong retail franchise, which facilitates a stable and growing deposit base as well as good capital measure, supported by consistent Profitability. ( ) It is a bank of excellent financial condition with enormous capacity to meet the maturity obligations as and when they fall due. Pharez Composite Rating 2006 ANNUAL REPORT & ACCOUNTS 2 ZENITH BANK PLC

4 Corporate Information DIRECTORS Macaulay Pepple Chairman Jim Ovia Managing Director /Chief Executive Godwin Emefiele Deputy Managing Director Chief E. M. Egwuenu Director Sir S.P.O. Fortune Ebie Director Prof. L.F.O. Obika Director Sir Steven Omojafor Director Babatunde Adejuwon Director Peter Amangbo Executive Director Elias IgbinAkenzua Executive Director Apollos lkpobe Executive Director Danladi Boro Executive Director (Passed on 22/10/2005) COMPANY SECRETARY Michael O. Otu AUDITORS Pricewaterhouse Coopers (Chartered Accountants) CORRESPONDENT BANKS Citibank N.A. 111, Wall Street New York, NY,10043 Deutsche Bank 1, BankersTrust Plaza 130, Liberty Street New York, NY Australia and New Zealand Banking Group Limited Minerva P. O. Box 7, Montague Close London SE 19DH Citibank N.A Cottons Centre Hays Lane London SE1 2QT Deutsche Bank 1, Appold Street Broad Gate London EC2A 2HE ZENITH BANK PLC Head Office Zenith Heights, Plot 87, Ajose Adeogun Street, Victoria Island, Lagos. Tel: , , , , Fax: Enquiry: Website: ANNUAL REPORT & ACCOUNTS 3 ZENITH BANK PLC

5 Financial Highlights Shareholders' Funds (N'b) Gross Earnings (N'b) Total Assets + Contingent Liabilities (N'b) Total Deposits (N'b) Profit Before Tax (N'b) Profit After Tax (N'b) ANNUAL REPORT & ACCOUNTS 4 ZENITH BANK PLC

6 Financial Highlights +67% Gross Earnings N58.22 billion +65% Profit Before Tax N15.15 billion +68% Total Deposits N billion +148% Shareholders Funds N93.8 billion +91% Total Assets Plus Contingents N billion 2006 ANNUAL REPORT & ACCOUNTS 5 ZENITH BANK PLC

7 Result at a Glance VAR. N'000 N'000 % Profit & Loss Gross Earnings 58,222,061 34,913, % Profit Before Taxation 15,154,091 9,164, % Profit After Taxation 11,488,800 7,155, % Dividend 6,600,000 4,200, % Balance Sheet Loans & Advances 199,707, ,494, % Advances Under Finance Lease 1,716, , % Deposit Liabilities 392,863, ,413, % Shareholders' Funds 93,800,665 37,789, % Total Assets/Plus contingents 714,513, ,889, % Per Share Data Earnings per 50k share 191 k 136 k 40.4% Dividend per 50k share (actual) 110 k 70 k 21.4% 2006 ANNUAL REPORT & ACCOUNTS 6 ZENITH BANK PLC

8 Corporate Profile Incorporation Zenith Bank Plc was incorporated (under the Companies and Allied Matters Act of 1990, as amended) on May 30, 1990 as a private company limited by shares. In July 2004, the Bank became a public company limited by shares and subsequently launched what still remains the most successful Initial Public Offering (IPO) in the history of the Nigerian Capital Market. It received an overwhelming investor affirmation by a subscription rate of 556% and about 289,489 subscribers. The Bank s 6,000,000,000 (six billion) ordinary shares of 50 kobo each were subsequently listed on the Nigerian Stock Exchange on October 21, Zenith Bank Plc achieved yet another milestone when it raised N53.63bn in February 2006 by a Public Offer of 3,000,000,000 (three billion shares),one of the largest amount in the history of the Nigerian Capital Market. The Zenith Franchise Network With over one hundred and eighty (180) business offices, connected onlinereal time, the Zenith franchise covers all the state capitals, the Federal Capital Territory (FCT), and major towns and cities in Nigeria. The Bank s wide area network facility is efficiently deployed and seamlessly integrated through a related communication company. The Bank s business location strategy and infrastructure deployment reflect its commitment to customer enthusiasm at all times in all business offices nationwide. The same unique brand of financial services awaits customers in each location. This has made the brand of first choice in banking to all the multinational companies in Nigeria and accounts for its wide customer base. Zenith Bank Plc has continued to pioneer the introduction of esolutions products to meet and surpass customer needs, anchored on its indepth knowledge and extensive financing experience of the public and private sectors in Nigeria. Corporate Performance Zenith Bank Plc is one of the largest and most profitable banks (post consolidation) in Nigeria with total assets plus contingents of over N714.5 billion as at The operating results for the year ended 2006 showed that profit before tax was N15.2 billion while its shareholders funds stood at N93.8 billion. The Bank has continued to record impressive performance on several parameters. This demonstrates rising customer patronage, and a strong endorsement of the brand across the country. Zenith Bank s growth and performance has earned excellent ratings from both local and international rating agencies. The Bank has been rated Aaa in Nigeria consecutively for the past six (6) years by Agusto & Co. Ltd. It also has the lowest nonperforming loans to total loans ratio of 1.7% against the industry average of 18% and has grown its asset base at an average of over 50% per annum in the last five years. Zenith Bank Plc continues to be committed to being a leading light in the deployment and utilization of Information and Communications Technology (ICT) for financial services delivery, with its service offering covering, but not limited to: Corporate and Commercial Banking Services Ebusiness Solutions including local and international card business Treasury and Cash Management Services Foreign Exchange and Trade Finance Services Funds/Assets Management Private Banking Investment Banking and Financial Advisory Services Subsidiaries Specialized financial and advisory services are similarly offered through the following subsidiaries of the bank: Zenith Securities Limited a securities trading and asset management company Zenith Registrars Limited share registration services Zenith General Insurance Company Limited insurance and risk underwriting company Zenith Pensions Limited a pensions custodian management company. Zenith Trust Company Limited a trusteeship services company Zenith Medicare Limited a medical insurance company Zenith Bank (Ghana) Limited a banking subsidiary. The brand is driven by a passion encapsulated in 2006 ANNUAL REPORT & ACCOUNTS 7 ZENITH BANK PLC

9 Corporate Profile the phrase: People Technology Service People... Our greatest asset we take care to identify and employ the best minds from every profession. We share a set of values that drive the Zenith Brand: to provide our clients with first class financial services, in their best interest and to create and maintain a professional environment that offers outstanding individuals the best opportunities to realise their potential and display their creativity. This, we believe, would translate into greater wealth creation for our clients and shareholders, helping to extend the Zenith franchise globally, with a strong commitment to social enterprise and generally giving back to society. We will continue to invest in people, technology and environment to underscore our corporate commitment to achieving customer enthusiasm Technology The Zenith Brand has become synonymous with the use of information and communications technology (ICT) in banking and general innovation in the Nigerian banking system. Service... At Zenith Bank, we are committed to the delivery of excellent services by a team of professionals and stable management, motivated by a common desire to constantly develop new ways for enthusing and surpassing customer expectations. We take a long term view of our relationship with our clients. Zenith is reputed to be the Nigerian Bank with the best quality relationships. The Zenith franchise dominates the upper segment of the Nigerian banking landscape. This has made the Bank the first choice bank to the top corporate and high net worth individuals. Zenith Bank Plc is committed to sustaining its foremost position in corporate social responsibility. Our philanthropic activities are anchored irrevocably on one premise: ensuring that we passionately give back to host communities and society for providing an environment that is supportive and conducive for the pursuit of enterprise ANNUAL REPORT & ACCOUNTS 8 ZENITH BANK PLC

10 Corporate Strategy From inception, Zenith Bank clearly set out to differentiate itself in the banking industry through its service quality, drive for a unique customer experience and the calibre of its client base. Today, it is easily associated with the following attributes in the Nigerian banking industry: Innovation Best risk assets portfolio Consistent superior financial performance High quality personnel Leadership in the use of Information and Communication Technology (lct) Consistent in raising the bar of competition, and Formidable marketing team The overall vision of the bank is to make the Zenith brand a reputable international financial services network recognised for innovation, superior customer service and performance while creating premium value for all stakeholders. Key Strategies The key strategies that will enable us deliver our vision are: To deliver superior and tailormade service experience to all our customers at all times. Develop deeper and broader relationship with all clients and strive to understand their individual and industry peculiarities with a view to developing specific solutions for each segment of our customer base. Significantly expand our operations by adding various distribution channels and entering into new markets. Maintain our position as a leading service provider in Nigeria while expanding our operations internationally in West Africa and the financial capitals of the world. Strive to be a leading service provider in Nigeria by continuing to build on longstanding relationships, capabilities and the strength of our brand and reputation. Expand our business through the establishment of key subsidiaries for the provision of nonbank financial services to accentuate the service offerings and experience of our customers. Continually enhance our processes and systems platforms to deliver new capabilities and improve operational efficiencies and achieve economies of scale ANNUAL REPORT & ACCOUNTS 9 ZENITH BANK PLC

11 Notice of Annual General Meetings NOTICE IS HEREBY GIVEN that the Sixteenth Annual General Meeting of Zenith Bank Plc will hold at the Shehu nd Musa Yar Adua Centre, 1, Memorial Drive (opposite Sheraton Hotels & Towers) Abuja at 9.00 a.m. on the 22 day of August, 2006 to transact the following business: ORDINARY BUSINESS 1. To receive and adopt the Audited Accounts for the year ended 30th June, 2006, the Reports of the Directors, Auditors and Audit Committee thereon. 2. To declare a dividend. 3. To elect Directors. 4. To authorize the Directors to fix the remuneration of the Auditors. 5. To elect members of the Audit Committee. SPECIAL BUSINESS To consider and if thought fit, to pass the following as ordinary resolution 6. To approve the remuneration of the Directors. th Dated this 17 day of July, NOTE: PROXY: A member of the company entitled to attend and vote at the general meeting is entitled to appoint a proxy in his stead. All instruments of proxy should be completed, stamped and deposited at the office of the Company s Registrars, Zenith Registrars Limited, 1, Ade Odedina Street, Victoria Island, Lagos State not later than 48 hours before the time of holding the meeting. A proxy need not be a member of the company. 1. Dividend nd If approved, dividend warrants will be posted on 22 August 2006, to shareholders whose names are th registered in the Register of Members at the close of business on 7 August, Closure of Register of Members th The Register of Members and Transfer Books of the Company will be closed from 7 August, 2006 to 14 August, 2006 (both dates inclusive), to enable the Registrar prepare for the payment of dividend. 3. Audit Committee In accordance with Section 359(5) of the Companies and Allied Matters Act, 1990, any shareholder may nominate another shareholder for appointment to the Audit Committee. Such nomination should be in writing and should reach the Company Secretary at least 21 days before the Annual General Meeting. th By Order of the Board MICHAEL O. OTU Company Secretary Plot 84, Ajose Adeogun Street Victoria Island, Lagos 2006 ANNUAL REPORT & ACCOUNTS 10 ZENITH BANK PLC

12 0 0/7 6 07/ 06 The Power of Information Technology Over the past decade, Zenith Bank Plc has been at the forefront of reshaping the modus operandi of banking in Nigeria through strategic deployment of information technology (IT). From our early days, we realised that if properly harnessed, the dynamism of IT will give us the power and flexibility to continually redefine service standards and sustain customer enthusiasm. Consequently, speed, efficiency, creativity and flexibility became our abiding watchwords. Our service delivery channels and style have benefited immensely from technological innovation, thanks to the great discoveries of great scientists and IT gurus of our time. The pace of technological advancement has been both challenging and refreshing as it also gives us the impetus to pursue our dreams as a bank and to fulfil our service promise to our esteemed customers. One of the greatest minds of our time, Albert Einstein once said:...science is a powerful instrument. How it is used, whether it is a blessing or a curse to mankind depends on mankind and not on the instrument... Indeed scientific discoveries especially since the nineteenth century, has significantly influenced every facet of human society. Similarly, banking in Nigeria has evolved from the traditional armchair banking to a customercentric approach leveraging on information technology. Zenith Bank has been at the vanguard of this and was easily the first in deploying technology in many aspects of banking. For instance, Zenith Bank blazed the trail, over a decade ago, in online realtime banking in the Nigerian banking landscape. It was the first bank to build its own website which has consistently won the Web Jurist Award in Nigeria. Only recently, it launched the first ever branded Automated Teller Machines (ATMs) in Nigeria. Zenith Bank has leveraged its indepth understanding of the local business environment and global financial markets to develop unique esolutions to meet specific customer needs. The unique deployment of IT to customer service delivery has made the Zenith franchise synonymous with the use of IT in banking. We are very excited about the future and the promise it holds for technological advancement and innovation. One thing is certain; competition in all facets of human endeavour will continue to be redefined by these technological advancements and innovations. Our strategy is to embrace these innovations and consider how they can be used for the good of all our stakeholders. Information Technology guru, Bill Gates succinctly captured the essence of innovation when he opined:...the successful companies of the next decades will be the ones that use digital tools to reinvent the way they work, make decisions quickly, act efficiently and directly touch their customers in positive ways... OUR EPRODUCTS The bank's eproducts cover a wide range of services and fall into three broad categories; Payment / Collection Solutions; Card Solutions, and Reporting Tools. Some of these products are explained below: Payment/Collection Solutions Electronic Point of Sale an alternative electronic funds collection channel for customer merchants who currently collect cash for goods and services. SalPay Solutions for our corporate customers who do not require multiple levels of authorizers to effect their employee salary payments. Zenith ATM is an electronic payment platform for basic banking transactions. Zenith Flowline Application is an automated cheque writing solution that eliminates physical cheque writing thus enhancing corporate payment system. Zenith Automated Direct Payment System (ADPS) is an electronic payment solution for corporate customers that eliminate manual writing of many cheques and the associated delays. Zenith Corporate Pay is a product for corporate customers to handle all classes of payments including salary, multiple utilities payments and payments to 2006 ANNUAL REPORT & ACCOUNTS 11 ZENITH BANK PLC

13 VALID FROM EXPI R E END I END /07 The Power of Information Technology third parties generally. Zenith Mobile Commerce: with the use of the mobile phone, customers can perform various financial transactions online such as: Airtime purchase Banking Bill Payment GSM Postpaid Pay DSTV etc. This service is made available to customers currently on the ETRANZACT platform. Card Solutions Etranzact Card is an online card for use not only on Point of Sale (POS) and internet but also mobile phones. Zenith Swiftpay is a payment solution on which the key distributor schemes are anchored. The product is targeted at manufacturers and their key distributors. Zenith Automated School Solutions is an electronic solution through which students' administration and registration procedures are captured seamlessly and efficiently. The product is deployed in partnership with our technical partners, Socketworks Limited. ZSAVE CARD is an online debit/photo ID card for Zenith savings account holders. It is an electronic means of withdrawing money, making purchases and checking balances in an account. It can be used to make payments or withdrawals from any of the channels on the Interswitch network ATM, POS and Web channels. Zenith Credit Card is a member of the MasterCard brand for Zenith account holders, offering an approved line of credit with up to 45 days, interest free. There are three main categories: CLASSIC RED, GOLD and PLATINUM. Zenith Charge Card, another VA L ID MRFO 06 / 05 07/ 06 EXP RE member of the Zenith MasterCard family created for nonzenith account holders and having the same benefits of a credit card except that it requires collateral. Web Surfer Card is a MasterCard brand exclusively for internet payments. It is a prepaid reloadable card for use only on the internet, providing extra security for Zenith card holders. Zenith Travelex Cash Passport is an electronic replacement of the traveler's cheque the way you know it! EasyPay/EasyTrade is a special merchant service for customers (merchants) who want to collect electronic funds for their goods and services via the web. Reporting Tools Zenith Easy Card is an online debit card for Zenith bank current account holders, providing an electronic platform for all types of payment and ATM withdrawals on the Interswitch network. VpayCard is a local VISA debit card with the same characteristics and features as our EazyCard. Zenith Notification Suite is a wide range of electronic notification solutions which include the following: (i) (ii) (iii) Notification of withdrawals and deposit transactions. Notification of deposits only Other transaction notifications: Shipping Documents BC Notification Bills for Collection LC Notification Letter of Credit Form M Notification (Approval & Scanning Stage) RAR Notification (Risk Assessment Report) Monthly statements notifications 06/ 05 07/ ANNUAL REPORT & ACCOUNTS 12 ZENITH BANK PLC

14 07/ 06 VAL ID FROM 6/ 5 EXPERI END 7 VA L ID FRO M 6/05 EX P IRE NED /07 The Power of Information Technology The notifications are delivered via or mobile SMS technologies. Zenith Internet banking affords customers a wide range of transaction activities which include the following: Check account balances & access transaction history Cheque book & Draft request View & download account statements. Cheque Confirmation View real time transactions activity especially for corporate customers Bulk Payment (One to Many) Download monthly statements Self to Self transactions Inter (You to anybody in Zenith); Intra (You to You) Bill Payment View Master Card transactions Zenith Telelink and Mobile banking products anchor our range of mobile banking transactions and enquiries using both land and mobile phones. 0 / 6 Leaders in the industry / ANNUAL REPORT & ACCOUNTS 13 ZENITH BANK PLC

15 Chief Executive s Review Jim Ovia Managing Director / Chief Executive ANNUAL REPORT & ACCOUNTS As one of the market leaders in epayment and deployment of various eplatforms in growing our consumer and retail banking activities, we will expect a major paradigm shift in customers' taste and preferences for a more flexible, easy and cost effective way of doing business through eplatform. Zenith is a natural choice ANNUAL REPORT & ACCOUNTS 14 ZENITH BANK PLC

16 ANNUAL REPORT & ACCOUNTS Chairman s Statement We will continue to put our stamp of proven quality in terms of product differentiation and speedy service delivery as well as capacity for wider market penetration and reach Macaulay Pepple Chairman 2006 ANNUAL REPORT & ACCOUNTS 15 ZENITH BANK PLC

17 Chairman s Statement 2006 ANNUAL REPORT & ACCOUNTS 16 ZENITH BANK PLC

18 Chairman s Statement 2006 ANNUAL REPORT & ACCOUNTS 17 ZENITH BANK PLC

19 Corporate Social Responsibility Zenith Philanthropy...giving back to society Our commitment to Corporate Social Responsibility (CSR) is predicated on our belief that responsible corporate citizenship compels us as an organization to look beyond the bottom line. As a responsible corporate citizen, Zenith Bank believes in giving back to society and this is anchored irrevocably on one premise: making sure that the host communities in which we operate and the society at large receive something back for providing Zenith Bank Plc with an environment that is conducive for the pursuit of enterprise and the creation of wealth for all our stakeholders. As a corporate entity with a firm belief in the inherent potentials in education as well as Information and Communications Technology (ICT) as the most important tools for youth empowerment, nation building and wealth creation, Zenith continues to focus its primary attention in those two areas. There is also significant emphasis on health causes as well as contributions in aid of victims of natural or man made disasters. EDUCATION The bank s emphasis on education remains unwavering and this is borne out by its donations to the sector which amounted to well over N30m. Only recently, in collaboration with our technical partners, Socketworks Limited, we began a massive rollout of eschools solutions that would revolutionize the educational records and students administration in Nigerian universities and polytechnics. Zenith Bank believes that an educated citizenry would provide a skilled work force that would drive the economy into a new era of growth and prosperity. To achieve this, the bank committed well over N30m towards meeting sundry needs of primary, secondary and tertiary institutions across the nation. In the 2006 Financial Year, St. Saviours School, Lagos received N20m while the University of Lagos received about N2m as donation to maintain and service their ICT Center which was built by Zenith Bank Plc. Nnamdi Azikiwe University, Awka received a 406 Peugeot car valued at N3.7m while Ambrose Alli University received N668,000 for its esofties initiative while the Federal University of Technology, Yola received a N1m donation. Folorunsho Commercial School also received over N1.5m which was used to carry out renovation work in the school. ICT/YOUTH EMPOWERMENT Zenith remains committed to helping our youths bridge the digital divide in order to enable them take advantage of the robust opportunities open to them in the information super highway. To this end, the bank rd th held the 3 and 4 Youth Empowerment Forum for Digital revolution in Abuja and Lagos. At the Abuja event, computers worth over N50m were donated to secondary schools in the Federal Capital Territory. The Lagos event, which is in its third year, witnessed a massive turn out of over 1000 young men and women drawn from select primary, secondary and tertiary institutions from the Lagos area. The first two hundred participants to arrive the venue received Personal Digital Assistants (PDAs) valued at over N10m. HEALTH AND WELFARE Zenith Bank identifies fully with the Millennium Development Goals (MDG) especially in its emphasis on preventing child mortality, improving maternal health and combating HIV/AIDS and so continues to contribute substantially to health causes. During the year under review, a youngster, Sule Olanipekun, who lost his hand in a domestic accident, received a prosthetic limb valued at N250, 000 from the bank, while Hope Adeyemi received N400, 000 to enable her undergo a much needed surgical operation. The bank supported three other young Nigerians with N1.2m to enable them undergo corrective heart surgeries. We also made a cash donation of N250, 000 to the Yetim Care Foundation, N500, 000 to Little Saints Orphanage, N200, 000 to the AIDS Support Programme as well as a N1m donation to UN World Poverty Foundation Walk amongst others. DISASTER RELIEF In the year under review, the bank continued to lend a helping hand to individuals and communities affected by disaster. Our commitment to alleviating the pains of victims of natural and man made disasters came to the fore once again when we donated the sum of N10m to the Jalingo Flood Relief Fund set up in the wake of the devastating floods which wreaked havoc in the state. The bank has also awarded scholarships, up to University level, to the children of ACP Anthony, a police officer who lost his life while rescuing people during the flood. The children received the sum of N110, 000 for their school fees during the year. Zenith Bank also donated the sum of N5m to the Nigerians United to Save Niger (NUSAN) fund set up to assist victims of famine and drought in the neighboring 2006 ANNUAL REPORT & ACCOUNTS 18 ZENITH BANK PLC

20 Corporate Social Responsibility Niger Republic. RELIGIOUS ORGANIZATIONS The bank s commitment to fostering the spiritual welfare of Nigerians was exemplified in its contributions of over N30m to religious organizations of various stripes and persuasions in the year under review. The bank donated over N20m in support of the Abuja Ecumenical Center, N4.5m to the Redeemed Christian Church of God Province II, N4.5m to the Qua Iboe Church, N1m to The Mighty Men of Valour Fellowship (Communion Church), N500, 000 to the Church of the Pentecost, FESTAC, N300, 000 to the Church of Assumption, Falomo. Other recipients include Folawiyo Memorial Methodist Church, St. Agnes Church Maryland, and African Bethlehem Cathedral Church, Foursquare Gospel Church in Nigeria etc. SPORTS Zenith bank is the official sponsor of the Female League of the Nigerian Basket Ball Federation. The bank committed over N20m towards the sponsorship of the league. The bank s contribution to sports and the physical well being of our youths is however not limited to basketball alone as it channeled substantial resources towards other sports. The bank donated N15m to the National Sports Festival, Gateway Games 2006, N1m to the AKS Golf Tournament and another N20m as sponsor of the AAC/AFN Athletics event. Zenith Bank believes that by giving back a portion of its profit to the society, it would be touching the lives of many in the environment, people and institutions that perhaps would not have been so opportune. OTHERS Zenith Bank continues to provide support in many other ways to the community and society at large. In March 2006, the bank committed a princely N322m to the rehabilitation and reconstruction of the 2.6 kilometer Ajose Adeogun road, Victoria Island, Lagos. The bank will not only rebuild the road, it will also beautify, landscape and supply electricity on a twentyfour hour, seven days a week basis to the road. The bank also provides support to various nongovernmental organizations in the areas of capacity building and training. In the period under review, the bank supported LEAP Africa s entrepreneurship training initiatives with N662,000, committed N10m to the FCTA Professional Recruitment Fund, and contributed N3m towards offsetting Dr. Stephen R. Covey s speaking fees. The bank also offered financial support to NSIT, ICAN, and sundry professional bodies as well as to authors who launched their books during the period ANNUAL REPORT & ACCOUNTS 19 ZENITH BANK PLC

21 Board of Directors Macaulay Pepple Chairman Jim Ovia Managing Director / Chief Executive Godwin Emefiele Deputy Managing Director Sir S. P. O. Fortune Ebie Director Chief E. M. Egwuenu Director Sir Steven Omojafor Director 2006 ANNUAL REPORT & ACCOUNTS 20 ZENITH BANK PLC

22 Board of Directors Prof. L. F. O. Obika Director Babatunde Adejuwon Director Peter Amangbo Executive Director Apollos Ikpobe Executive Director Elias IgbinAkenzua Executive Director 2006 ANNUAL REPORT & ACCOUNTS 21 ZENITH BANK PLC

23 Executive Management Jim Ovia Godwin Emefiele Peter Amangbo Adaora Remy Umeoji Elias IgbinAkenzua Apollos Ikpobe 2006 ANNUAL REPORT & ACCOUNTS 22 ZENITH BANK PLC

24 Management Team Jim Ovia Managing Director/chief Executive Emefiele I. Godwin Deputy Managing Director Ikpobe O. Apollos Executive Director IgbinAkenzua Elias Executive Director Amangbo Peter Executive Director Umeoji Remy Adaora Group DIrector Udom Emmanuel General Manager Okoye Charles General Manager Ayeni Nonye General Manager Yough Pamela General Manager Ehimiaghe Ohimai General Manager Adeniyi Adewale General Manager Udensi Adaeze General Manager Onyeagwu Ebenezer General Manager Nwapa Adobi General Manager Esenwa Joseph General Manager Akala Sullivan General Manager Osakwe Osadebe General Manager Aigbokhaevbo Kingsley General Manager Mahe Abubakar General Manager Meniru Julian Ekene Deputy General Manager Olanipekun Tunji Deputy General Manager Dayilim Abbas Deputy General Manager Shettima Kashim Deputy General Manager Alagbada Abiola Omolara Deputy General Manager Nwarache Patrick Deputy General Manager Jarikre Gideon Deputy General Manager OniEgboma Nkem Deputy General Manager Omeje Alphonsus Deputy General Manager Modilim Patrick Deputy General Manager Latunji Olubukola Deputy General Manager IkehUnekwe Obiageli Deputy General Manager Chukwunyem Francis Deputy General Manager Bolorunduro Adewale Deputy General Manager Alale Oladoyin Deputy General Manager Awe Lugard Deputy General Manager Ekpebu Tari Deputy General Manager Oladipo Sola Deputy General Manager Agoreyo Johnson Deputy General Manager Eze Peter Deputy General Manager Ilegar Sunday Deputy General Manager Anyaegbunam Emeka Deputy General Manager Amene Rita Deputy General Manager 2006 ANNUAL REPORT & ACCOUNTS 23 ZENITH BANK PLC

25 Management Team Fasoranti Temitope Deputy General Manager Ntia Gabriel Deputy General Manager Olisa Dennis Deputy General Manager Njoko Chikaodi Augustine Assistant General Manager Onyemenam Chris E. Assistant General Manager Ogunranti Akindele Anthony Assistant General Manager Anyanwu George Ugochukwu Assistant General Manager Ogunbiyi Adeola Adewunmi Assistant General Manager Ovbiagele Iruobe Desmond Assistant General Manager Egbon Agbonmwanre Felix Assistant General Manager Ahmed Shuaib Umar Assistant General Manager Abutu Akogu Reuben Assistant General Manager Atsagbede F. Mogbitse Assistant General Manager Ekonye Uzuazob Francis Assistant General Manager Ekhoragbon Gadaffi Assistant General Manager Iboje Kofi Marvis Assistant General Manager Ighade Onyema Lucky Assistant General Manager Akande Lawrence Assistant General Manager Bello Aisha Assistant General Manager Umar Sanusi Assistant General Manager Akpati Benson Asua Assistant General Manager Oduah Onyebuchi Stanley Assistant General Manager Abanum Raphael Assistant General Manager Ameh Emmanuel O Assistant General Manager Ayeronwi Olajide Assistant General Manager Odom Louis Eziokwu Assistant General Manager Ntui Oku Donald Assistant General Manager Diriyai Tarinipre Assistant General Manager Etiebet A. Idongesit Assistant General Manager Ishola Azee Olanrewaju Assistant General Manager Ma'aji Mohammed Iro Assistant General Manager Adesola Ademubi Ololade Assistant General Manager Okiti James Ochuko Assistant General Manager Oroh Akpotoheri Henry Assistant General Manager Tanko Maiyanga Safio Assistant General Manager 2006 ANNUAL REPORT & ACCOUNTS 24 ZENITH BANK PLC

26 Corporate Governance Consistent with global best practices, Zenith Bank is committed to upholding good corporate governance in the conduct of its business. This has remained the driving force behind our success story in the past sixteen years. The recently published Central Bank of Nigeria (CBN) Code of Corporate Governance for banks in Nigeria postconsolidation has also provided us another opportunity to measure the bank s compliance level on corporate governance issues. The Bank has in place various mechanisms for regularly appraising our processes to ensure that we operate in compliance with the dynamics in the corporate governance environment. Board of Directors The Bank has a Board of Directors comprising personages with a mix of skills and experience. All members are well versed in the business of the bank and conscious of their statutory obligations and responsibilities to the shareholders. The Board meets regularly to determine the strategic direction of the Bank and to review operating, financial and risk performance. The executive management of the Bank is responsible to the Board for developing strategy; for the profitability and overall performance of the Bank. The eleven person Board, for ease of oversight function on the management and in conformity with the intendments of the Code of Good Corporate Governance, comprises five executive and six nonexecutive members. The Board makes use of committees to address key areas of our business. Committees The Committees assist the Board in its oversight functions. This is in compliance with statutory requirements as well as in line with global best practices. Membership of the committees of the Board is intended to make best use of the skills and experience of nonexecutive directors, in particular, and to minimize (to the extent possible) unnecessary overlap and duplication of membership. These committees consider matters that fall within the scope of their various terms of reference to ensure that decisions reached are as balanced and as objective as possible. The Board and the various committees meet regularly, and there are always frank discussions between the committee members and management on all major issues. Currently, the following are the standing committees of the Bank: Board Credit Committee The Committee is made up of eight members comprising all Executive Directors of the Bank as well as three non Executive directors. The Board Credit Committee has as its Chairman, a nonexecutive Director who is well versed in credit matters, having retired as Managing Director/Chief Executive of a commercial bank. The Committee considers loan applications above certain levels that are referred to it by the Management Credit Committee. It determines the credit policy of the bank or changes therein. The Committee meets quarterly but may meet at such other times as business exigency demands. Members of the Board Credit Committee are as follows: 1. Chief Eddy Egwuenu Chairman 2. Sir. S.P.O. Fortune Ebie Member 3. Sir. Steve Omojafor Member 4. Mr. Peter Amangbo Executive Director 5. Mr. Elias IgbinAkenzua Executive Director 2006 ANNUAL REPORT & ACCOUNTS 25 ZENITH BANK PLC

27 Corporate Governance 6. Mr. Apollos Ikpobe Executive Director 7. Mr. Godwin I. Emefiele Deputy Managing Director 8. Mr. Jim Ovia Managing Director/CEO Staff Matters, Finance & General Purpose Committee: This Committee is made up of five members: three executive directors and two nonexecutive directors. It is chaired by a nonexecutive director. The Committee looks into large scale procurement by the bank, and matters bordering on staff welfare, discipline, staff remuneration and promotion. The Committee meets every quarter but may also meet at such other times as business exigency may require. The members are: 1. Professor (Prince) L.F.O. Obika Chairman 2. Mr. Babatunde Adejuwon Member 3. Sir. Steve Omojafor Member 4. Mr. Godwin I. Emefiele Deputy Managing Director 5. Mr. Jim Ovia Managing Director/CEO Audit Committee Zenith Bank has an Audit Committee, which was established in line with Section 359(6) of the Companies and Allied Matters Act, We recognize the Committee as the guardian of public interest, and reflect this both in the composition and caliber of its membership. The Committee s membership consists of three representatives of the shareholders elected at the last Annual General Meeting (AGM) and three nonexecutive directors. Alhaji Hamis B. Musa, a shareholder representative chaired the Committee during the year. Other members of the Committee include Mr. Vincent Ebuh, Mr. Alade Akesode, Sir. S.P.O. Fortune Ebie, Chief Eddy Egwuenu and Professor (Prince) L.F.O. Obika. The Committee meets every quarter, but could also meet at any other time, should the need arise. Furthermore, the Bank is in the process of establishing a Board Audit Committee to deal with matters relating to internal control policies of the Bank. The Committee will also be dealing with Audit report of branches and departments of the Bank submitted by the branch inspection unit of the Bank as well as occasional audit reports on some of the bank s subsidiaries. Other Committees In addition to the aforementioned committees, the Bank has in place, other Standing Committees. They include: 1. Assets and Liabilities Committee (ALCO) 2006 ANNUAL REPORT & ACCOUNTS 26 ZENITH BANK PLC

28 Corporate Governance 2. Management Committee (MANCO) 3. Management Credit Committee (MCC) Relationship with Shareholders As a deliberate policy, Zenith Bank maintains an effective and candid communication with its shareholders, which enables them understand our business, financial condition and operating performance and trends. Apart from our annual report and accounts, proxy statements and formal shareholders meetings, we maintain a rich website (with suggestion boxes) that provide information on a wide range of issues for all stakeholders. The Bank has, on account of this, won for three consecutive years (2004,2005, 2006), the Web Jurist Best Bank Website, based on a study by the reputable firm of Phillips Consulting. The Bank also, from time to time, holds briefing sessions with market operators (stockbrokers, dealers, institutional investors, issuing houses, stock analysts, etc) to update them with the state of our business. These professionals, as advisers and purveyors of information, relate with and relay to the shareholders useful information about us. We also regularly brief the regulatory authorities, and file statutory returns which are usually accessible to the shareholders ANNUAL REPORT & ACCOUNTS 27 ZENITH BANK PLC

29 Risk Management & Control Risk Management and Control Risk management is critical to our ability to continually create shareholder value. The nature and complexity of risks in our business requires that we have a strong and robust risk management structure to provide adequate oversight at all levels of the organization. The main thrust of Zenith Bank s risk management process is to enhance its capacity to create value by providing a means of effectively dealing with uncertainty and associated risks and opportunities. The process has been designed in a manner that is sufficiently rigorous and comprehensive to give management greater insight into competing strategic alternatives and the degree of uncertainties associated with the alternatives and associated risks. Risk management processes at all levels of the organization comprise: Head, Internal control and audit, reviews the internal control systems and processes and provides an independent assurance on the entire system. The head of Internal Control and Audit reports to the Audit Committee which comprises nonexecutive directors and representatives of shareholders and also has unfettered access to the Managing Director/Chief executive. Head, Credit risk management, manages the bank s credit approval, disbursement and administration process. This includes ensuring that credit policies and procedures align business objectives and strategies. At the level of departments and business units, risk management processes are built into each activity. This is either in the form of independent review activities by persons not involved in the process or review by an internal auditor or persons responsible for compliance. Identification; Assessment; Response and control measures; and Reporting. Audit Committee Board of Directors Board Credit Committee Risk management structure and responsibilities Executive Management Global Credit Committee The risk management structure of the bank has been established based on the business strategies and risks inherent in the pursuit of those strategies. This structure provides the framework for effectively managing the bank s risks on a daily basis. A summary of key responsibilities is set out below: The Board of directors drives the entire governance and risk management process by setting the tone at the top of the organization and the basis for how risks should be viewed by management and staff. Through its various committees, the board monitors the adequacy of internal control systems established by executive management to manage risks. The Audit Committee provides oversight on the systems of internal control, financial reporting and compliance. Chief compliance officer is an independent oversight function on the bank s compliance with relevant laws and regulations. Head, Internal Control & Audit Chief Compliance Officer Heads of Departments, Business Groups and Units Risk responsibilities matrix Head, Credit Risk Management, Staff Risk management structures and processes are continually reviewed to ensure, their adequacy and appropriateness for the bank s risk and opportunities profile as well as bringing them up to date with changes in strategy, business environment, evolving thoughts and trends in risk management. Basel II The Central Bank of Nigeria (CBN) recently released its Framework for Risk Based Supervision of Banks in Nigeria as a precursor to the full implementation of the New Capital Accord. The framework is aimed at changing the current approach to banking supervision in Nigeria which is largely transaction and compliance based to a more effective riskbased approach ANNUAL REPORT & ACCOUNTS 28 ZENITH BANK PLC

30 Risk Management & Control On the part of the bank, we have proactively commenced strengthening various areas of our business and business information systems. We believe that banks with a combination of robust risk infrastructure and information technology will have competitive advantage during the implementation of the New Accord. Accordingly, the bank has commenced the process of implementing a worldclass, top of the range banking application system and training of our staff on the principles of the New Accord. We will strive to deal with strategic issues and potential impact of the New Accord on our business while awaiting the complete implementation timetable of the regulatory authorities ANNUAL REPORT & ACCOUNTS 29 ZENITH BANK PLC

31 Directors Report FOR THE YEAR ENDED 30 JUNE, 2006 In compliance with the Companies and Allied Matters Act 1990, the Directors have pleasure in presenting their th report on the affairs of Zenith Bank Plc, together with the audited financials for the year ended, Legal Form and activities during the year The Bank is engaged in the business of providing universal banking services to corporate, commercial and individual customers which include granting of loans and advances, leases, financial advisory services, investment banking, foreign exchange services and others. The Bank was incorporated as a limited liability company with 100% equity ownership by Nigerians on May 30, 1990 and commenced operation on July 16, It became a public liability company on May 20, The Bank's shares are listed on the floor of the Nigerian Stock Exchange. Directors Who Served During the Year Macaulay Pepple Chairman Jim Ovia Managing Director/Chief Executive Godwin Emefiele Deputy Managing Director Chief Eddy M. Egwuenu Director Sir. S.P.O. Fortune Ebie Director Professor (Prince) L.F.O. Obika Director Sir. Steven Omojafor Director Babatunde Adejuwon Director Peter Amangbo Executive Director Elias IgbinAkenzua Executive Director Apollos Ikpobe Executive Director Danladi Boro Executive Director(Deceased) Directors' Interest in Shares The Directors' interest in the ordinary shares of the Bank were as follows: Name of Directors Numbers of Ordinary shares held at: 30/06/ /06/2005 Macaulay Pepple 2,759,665 2,000,000 Jim Ovia 407,232, ,232,000 Godwin Emefiele 13,969,965 10,456,000 Sir S. P. O. Fortune Ebie 1,134,000 1,056,000 Chief E. M. Egwuenu 289,645, ,944,000 Prof. Prince L.F.O. Obika 1,621,600 1,030,000 Sir Steven Omojafor 856, ,000 Babatunde Adejuwon 1,454, ,000 Peter Amangbo 1,900, ,000 Elias IgbinAkenzua 3,706,169 1,076,169 Apollos Ikpobe 2,335, ,000 Danladi Boro (Passed on 22/10/2005) 400, ,000 Directors' Responsibilities The Directors are statutorily responsible for the preparation of the financial statements and profit and loss showing a true and fair view of the statement of affairs of the Bank at the end of the financial year and in compliance with the Companies and Allied Matters Act, 1990, and Banks and Other Financial Institutions Act, 1991, in ensuring that: 2006 ANNUAL REPORT & ACCOUNTS 30 ZENITH BANK PLC

32 Directors Report FOR THE YEAR ENDED 30 JUNE, 2006 sufficient and adequate internal control procedures are put in place to safeguard assets, prevent and detect fraud and irregularities. Proper accounting records are maintained at all times; applicable accounting standards are adhered to and appropriate legislation complied with; Suitable accounting policies are adopted and consistently applied. Results of Operations 2006 N' N'000 Profit Before Taxation 15,154,091 9,164,787 Income Tax (3,665,291) (2,008,861) Profit After Taxation 11,488,800 7,155,926 It is recommended that the profit after taxation for the year be appropriated as follows: 2006 N' N'000 Statutory Reserve 1,723,320 1,073,389 Small Scale Industries Reserve 1,148, ,593 Proposed Dividend 6,600,000 4,200,000 General Reserve 2,016,600 1,166,944 Acquisition of Own Shares The shares of the Bank are held in accordance with the Articles of Association of the Bank. The Bank has no beneficial interest in any of its shares. Fixed Assets Information relating to changes in fixed assets is given in note 15 to the Financial Statements. Charitable Gifts During the year, the Bank made donations to charitable institutions, individuals and bodies amounting to N428,423,181 (2005: N76,744,804). Some of the beneficiaries are: Internet Access University of Lagos 3,155,250 Ecumenical Centre 25,000,000 CSA Production Limited 3,127,500 Institute of Chartered Accountants of Nigeria 660,000 National Sports Festival, Gateway ,000,000 Athletics Federation of Nigeria 20,000,000 Ahmadu Bello University, Zaria 400,000 Vivian Fowler Memorial School 266,000 Federal University of Technology, Yola 1,000,000 Jalingo Flood Relief Fund 10,000,000 National Association of Women Judges 250,000 Men of Valour Fellowship 1,000,000 Little Saints' Orphanage 500,000 Arrive Alive Project 3,500,000 Ambrose Alli University 1,152,900 Nigerian Army Museum 5,100,000 Nigerian Basketball Federation 17,500, ANNUAL REPORT & ACCOUNTS 31 ZENITH BANK PLC